Racal write-down spikes Thales guns

Ross Tieman12 April 2012

THE acquisition of British defence and telecommunications group Racal two years ago has returned to haunt French rival Thales. It has been forced to write off £285m in goodwill on the £1.82bn purcahse.

The e460m write-off pushed Thales's total goodwill write-downs to e709m, and left the French company, formerly known as Thomson-CSF, nursing a net loss of e366m, despite sales ahead 20% at e10.2bn. Thales chief executive Denis Ranque said the Racal write-downs largely reflected a fall in the value of its telecoms businesses, which specialise in telecoms services, positioning and call centres.

But he said the acquisition of the rump of Racal in a swansong deal by its architect Sir Ernest Harrison had been a good deal for Thales. 'The Racal acquisition has made Thales a major defence contractor in the UK, which has the highest military spending in Europe,' Ranque said.

Thales builds Starstreak anti-aircraft missiles in Belfast and submarine sonars in southern England. New defence orders booked by Thales in Britain last year rose 128% to e1.8bn, and it is in phase two studies to provide Britain's next generation of aircraft carriers.

Overall new orders rose 19% to e11.1bn and operating profits rose 19% to e667m.

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